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Reach PLC - London-based newspaper publisher - Warns the damage caused by rising inflation in 2022 is expected to be worse than in recent years and lead to a "modest" reduction in operating profit. For financial 2021 - the 52 weeks that ended December 26 - pretax profit is GBP73.3 million, up dramatically from GBP400,000 in 2020 on revenue of GBP615.8 million, up 2.6% from GBP600.2 million in 2020. Adjusted operating profit is up 9.2% to GBP146.1 million from GBP133.8 million, and adjusted operating profit margin widens to 23.7% from 22.3%. Digital revenue is GBP148.3 million, up 25% on 2020 and 39% on 2019; this means digital is now 24% of total revenue, up from 15% in 2019. The publisher will pay a dividend of 7.21 pence per share for 2021. In 2020, Reach paid a final cash dividend of 4.26p, plus a 2.63p interim dividend in shares in lieu of cash.
Looking ahead, Reach says: "The business is transitioning to become more digitally driven and the ongoing cost base reshaping will in part help fund continued investment. However, the impact from inflation, which began to affect the business towards the end of 2021, has now intensified, particularly in print production. This has primarily been reflected in the cost of newsprint (paper for printed products), which having previously been impacted by rising distribution costs and supply challenges, now also reflects the significant increase in energy prices. As a result, the gross impact of inflation in 2022 is expected to be higher than in recent years."
Current stock price: 168.80p, down 26% on Tuesday
12-month change: down 23%
By Tom Waite; thomaslwaite@alliancenews.com
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